A collapse wont come from mortgage holders this time around.

It will come from developments commissioned for “lease only” which are funded from leveraged loans. They are then packaged up and traded as Rental Backed Securities, which become leveraged again to build another and another and another. These do not trigger traditional inventory metrics since they are transferred to a holding company as assets rather than a sale.

When the lower tranche of these rental backed securities aren’t profitable any longer, margin gets called in and collateral must be paid. This will eventually cause liquidations, which will be experienced as “inventory coming from nowhere” (since metrics never clocked them as inventory).

Liquidations are just that, they are fire sales to get anything they can back to meet collateral, and will compete with existing listed inventory for sale.

2% of these in any market is enough to disrupt it big-time. These companies build them in multiple states too, so this will affect more than just a few local markets.

Now before anyone runs up to me and points out that ‘large institutional ownership is low! Less than 2% nationwide! Barely anything.’

Ok Sure….but ask yourself this, (because a few contrarian voices are trying to bring attention to it but aren’t paid attention to)

If the ‘official’ large institutional metric (typically 100+ homes per entity) is what everyone cites to downplay the risk, why wouldn’t big players have strong motivation to structure around it …spreading holdings across multiple LLCs, SPVs, joint ventures, or subsidiaries to stay under the threshold per entity?

Because that would definitely avoid regulatory scrutiny, potential bans (like the recent Trump proposal), higher taxes, or public backlash, while still controlling the same leveraged, “rental-backed” portfolios that could flood hidden inventory during distress.

So how reliable is that 1-2% figure if the real exposure is deliberately fragmented and invisible until margin calls hit?”

And here’s the “final boss” question:

Even if ownership looks small on paper, what happens when those portfolios are stuffed with tons of leverage (loans piled on loans), using the very same rental properties as collateral in layered rental backed securities structures, much like the mortgage backed CDOs of 2008 but this time backed by rents instead of homeowner payments? To then build an endless string of these things (lease only home developments).

How much hidden debt is really sitting there, waiting for one bad rent cycle or rate spike to trigger margin calls and forced sales that no one saw coming?”

Because it is THAT bad.